My wife, baby and I toured a home for sale last night. The list price is $899,900, 5,885 square feet, 7 bed, 6 bathrooms.
It is very nice and very fancy, it would be a big step up for us as far as quality goes. Luxury vinyl plank, granite countertops, copper farm tub sink, big walk-in master closet, clawfoot tub as well as steam shower in master bath, 30' ceiling in living room, gas fireplace, outdoor firepit, 2+ car garage, all high end stuff in the top neighborhood in town.
The catch is that the basement is a very big, nice 2-bedroom lock-off, and there is a garage apartment lock-off as well. Rents in my area are very high. We've house hacked twice now - which has enabled us to build up the next down payment without having to sell. (on top of my full-time job) I self-manage our 3 rental units with 7 tenants between 2 properties (including our basement lock-off). This one would bring those totals up to 5 units, 10? tenants, 3 properties. Living in luxury...with roommates.
Running the numbers:
$899,900 list price
$870,000 purchase price
20% down = $174,000 (We would need to clear out the betterment investment account [plus some savings]. In theory, this has been our short-term savings account for the next investment property, but its scary to cash it out.)
Monthly:
$3125 mortgage payment (30 year mortgage, 3.5%, $696,000 principle)
$1025 taxes, HOA, insurance, utilities
$4150 total expenses
$3500 lock-offs revenue
$650 monthly cost of ownership
We would rent out our current space, estimated at $2300.
Net result, +$1650/month, or $19,800/year (plus, no housing expense).
This move into a huge luxury home could essentially be the F-U money move that opens up the next chapter of our lives. At 35, I'm over my job. Our 5-month old baby is so fun, and we found an amazing babysitter, but we'd be able to be more involved with her, and possibly more kids down the road. My wife loves her job, but it'd be nice to focus more on family than careers, and have the pieces in place to FIRE or at least the freedom of FI to influence our daily lives.
I think the huge mortgage is a great opportunity to lock in long-term cheap debt. On our 2 current properties, we have about $650k outstanding mortgages now (both about 25 years remaining at 3.375% and 3.625%), but they are positive cash flow in a desirable, appreciating area and strong rental demand.
How's it sound? The piece I'm most concerned about is cashing out the betterment account (truly passive, includes about $20k money for nothin), but that's been my savings vehicle for exactly this type of property. Also a little nervous having 3 investments all in the same basket (houses in our town). What do you think? Anyone doing luxury house hacking?